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UK house prices holding up as city folk flock to the country

The number of city-dwellers pursuing their dream of a rural idyll is on the rise. And despite the pandemic, UK house prices are holding up well, says Merryn Somerset Webb.

What do you want right now? Immediate freedom to go to the Italian lakes aside, I bet that near top of your list is a bigger garden. If it isn’t that, it will be a home office or two, or perhaps an intergenerational living annexe – so if lockdown ever comes again you won’t have to go three months without seeing your family.

Whatever is on the list, the odds are you want the house itself to be in the country. In an ideal world your new bigger garden comes with a pool, a tennis court and a teenage bunk house scattered around its many acres.

I don’t want to spend another lockdown in a city (I don’t actually want to spend another day in my city) and around the world, an awful lot of people seem to feel the same. The New York Post reported this week that “frantic” Manhattanites were spilling out of the city into the suburbs, snapping up houses real estate agents had begun to think they would never sell – sometimes sight unseen. Want a five-bedroom colonial style home in Connecticut for $1m? You’d better rush.

You can see the same feeling in the data in the UK. Listings of properties to let in London have surged. Estate agents working within a few hours of London are telling stories of buyers flooding to the countryside, willing to pay almost anything for big houses they wouldn’t mind getting stuck in (Cornwall has gone nuts too). Rightmove reports that searches for houses with gardens were up 42% last month compared with last May.

People who used to care for nothing but kitchen islands and central London postcodes are now obsessing over online photos of raised vegetable beds and croquet lawns. The interest in the market isn’t just anecdotal. Savills saw agreed deals rise 108% on the week last week and exchanges up 53%. Wider market data from TwentyCi shows a 54% increase in the number of properties marked “sold subject to contract” across the market in the past week – and a 99% increase over £1m. If you live in London now and thought that a Surrey Hills house was beyond you before, it almost certainly is now. The rich move fast.

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No real risk of a house price crash

And prices? You’d think that in the wake of a global pandemic you’d already be seeing a bit of a slump. It isn’t necessarily so. Nationwide reported prices down 1.7% in May. That’s a nasty number if you annualise it. But there were so few transactions last month that this number is all but meaningless. Of more interest should be the fact that prices now appear to be more or less flat on where they were a year ago.

So what next? In the short term at least, it seems clear that there is to be a rebalancing of city and non-city prices. What of UK house prices as a whole? Here, things are a little less obvious. House prices are about sentiment, of course. But they are more about the availability and the price of credit and would-be buyers’ incomes.

When prices fall properly it is usually when unemployment rises fast and those who can’t meet their mortgage payments become forced sellers.

Unemployment is likely to rise fast as the furlough scheme comes to an end: ask around and you will hear company after company reluctantly starting redundancy consultations. However, not only could the bounceback be stronger than expected, but a good many households are in considerably better shape than they were pre-lockdown.

Numbers from the Office for National Statistics suggest that the lack of spending opportunities should have allowed the average household to save £182 a week for the past nine weeks, while analysis from Wagestream suggests that 52.5% of those who still have jobs “feel better off than usual.” Demand for payday loans fell 61% in the first three months of this year and in March alone UK consumers paid down a whopping £3.8bn of debt.

Add to this the fact that the banks are keen to not be the baddies in this crisis. They have offered easy access to the mortgage holidays mandated by the government, taken up so far by 1.8 million people, says UK Finance. It’s a reasonably safe bet that they will be firmly encouraged to show exceptional forbearance to those who can’t pay in full when the holiday period is up, too.

At the same time, while rates on very high loan-to-value mortgages have crept up a tiny bit – and some lenders have pulled out of this part of the market – rates overall are low and likely to stay low for now (at some point the levels of stimulus we are seeing will cause inflation, but not quite yet). This week Skipton Building Society reintroduced 85% loan-to-value mortgages and cut rates on lots of products. How does a five-year fix at 1.35% sound to you? Sounds good to me. Skipton is also accepting mortgage applications from furloughed workers, which has to help.

We might also see new government schemes put in place to support prices (there’s a scheme for everything else). This is not the kind of environment in which forced sellers cause a crash.

But prices have become more affordable

The final point to note is that UK house prices aren’t as stupidly expensive as usual at the moment. They have been fairly flat in real terms for a couple of years now and have gradually become more affordable as a result. Those who think that this crisis will spell the end for prime London property (a mistake I often make) might also note that by the end of last year prime central London prices were already down more than 20% from their 2016-2017 peak. That’s not a place collapses usually begin from. They might also note that while 2020 is not 2008, prime central London prices rose an astounding 26% between March 2009 and January 2010.

You will think from all this that I am predicting rising house prices. Buy, buy, buy! I’m absolutely not (that would be out of character, for starters) and nor is anyone else. Savills sees prices down at least 5% this year and Capital Economics sees them down 4%.

There are lots of brakes on this market. The pent-up demand that is running our poor country agents off their feet will slow. The implosion of the buy-to-let sector will bump up supply. There may well be wealth taxes on the way (any liability added to a house cuts its value) and if inflation does kick off, interest rates will have to rise.

My best guess (and my hope) is that house prices will stay flattish in nominal terms and perhaps fall in real terms, a situation that will suit almost everyone. My only worry? That I am on the wrong side of the city-country trade.

By Merryn Somerset Webb

Source: Money Week

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UK house prices jumped before coronavirus lockdown brought market to standstill

UK house prices jumped in March before the coronavirus lockdown brought the housing market to a standstill.

The average UK house price increased 2.1 per cent in the year to March, up from two per cent in February.

London house prices soared 4.7 per cent, the largest 12-month growth recorded in the capital since December 2016, according to the latest data from the Office for National Statistics.

In England house prices were up 2.2 per cent to £248,000 and increased 1.1 per cent in Wales to £162,000.

Scottish house prices increased 1.5 per cent and in Northern Ireland the average house price jumped 3. 8 per cent.

The ONS house price index is based on completed housing transactions, reflecting deals that occurred before the government imposed measures to reduce the spread of coronavirus.

The coronavirus lockdown introduced on 23 March brought the UK housing market to a standstill, with experts predicting a sharp drop in house prices this year.

However, estate agents and housebuilding firms have started to reopen as lockdown restrictions have been relaxed.

Pent-up demand

Some estate agents have reported a release of pent-up demand as restrictions have eased, resulting in a sharp uptick in enquiries.

Lucy Pendleton, property expert at estate agents James Pendleton, said: “Enquiry levels are off the chart at the moment and we are gradually bringing back more staff. Those who have already returned from being furloughed have been using words like ‘frantic’, which is a great sign.

“Only time will tell how we can convert those enquiries and how that translates into all-important prices for vendors.”

“The strong growth seen at the start of the year and annually has provided a strong foundation on which the market can bounce back and fears of a market crash should now move to the back of our minds,” Marc von Grundherr, director at Benham and Reeves, said. “Although, only time will tell, of course.”

However, other experts suggested the recovery for transaction numbers and UK house prices could be slower.

“Looking ahead, Covid-19 has re-introduced considerable uncertainty into the economy,” PwC economist Jamie Durham said.

“Although the Government has now lifted most of the restrictions on the housing market, we would expect the market, and in particular transactions, to remain subdued over the coming months.”

London to lead bounce back

“It’s significant that London was clearly powering ahead in March as the pandemic tightened its grip, with annual growth higher than at any point in the past three years,” Pendleton added.

“That tells you all you need to know about how prices should weather this storm, particularly in the capital which tends to inform what happens elsewhere in the country, albeit with a bit of a lag.”

By Jessica Clark

Source: City AM

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UK house prices: Experts predict sharp recovery after coronavirus lockdown

UK house prices could rebound after the coronavirus lockdown eases, after they grew at the fastest pace since 2017 before the crisis, Nationwide said today.

The value of British homes grew at their fastest rate since February 2017 before the coronavirus lockdown brought the market crashing to a halt, Nationwide data released today showed.

UK house prices grew 3.7 per cent on an annual basis in April, Nationwide said. That is their strongest rate of growth in 26 months.

And month to month UK house prices grew 0.7 per cent.

That saw the average UK home rise in value from £219,583 in March to £222,915 in April.

Nationwide’s data is based on mortgages approved in April but submitted earlier, hence April data showing growth despite the lockdown.

But the 3.7 per cent growth rate shows UK house prices were recovering from Brexit uncertainty before coronavirus struck.

Economic measures could save housing market

“Activity levels and price growth were edging up thanks to continued robust labour market conditions, low borrowing costs and a more stable political backdrop following the general election,” Robert Gardner, chief economist at Nationwide, said.

But coronavirus has seen UK house prices growth “grinding to a halt” since the lockdown kicked in. Banks have also granted 1.6m mortgage holidays to worried homeowners.

And Nationwide warned the medium-term outlook is “highly uncertain”.

“Much will depend on the performance of the wider economy,” Gardner added, predicted a significant contraction in the short term.

However, estate agents and housing experts today predicted a sharp recovery in UK house prices after the coronavirus lockdown lifts.

Gardner pointed to measures including £330bn in business support and the government’s job retention scheme. He said these could keep borrowing down and allow UK house prices to bounce back.

“The raft of policies.. should set the stage for a rebound once the shock passes,” he said.

“These same measures should also help ensure the impact on the housing market will ultimately be much less than would normally be associated with an economic shock of this magnitude.”

UK house prices ‘coiled like a spring’

Lucy Pendleton, founder of independent estate agents James Pendleton, agreed.

She said sellers are holding out for previously agreed prices from buyers suddenly looking for coronavirus bargains.

“That’s a sure sign that the strong growth Nationwide reports was building before the pandemic struck could find its feet again over the summer,” Pendleton said.

“This market may be running on fumes right now. But the vast majority of the clients we are speaking to aren’t being panicked into lowering their prices.”

She added: “The market is coiling itself up like a spring just like it did during the Brexit years. This latest growth figure… has to be taken with a big pinch of salt. [But it] was the result of all that pent up energy being released.

“This time we’ll be expecting just as big a post-lockdown leap in activity to make up for all the lost time.”

Iain McKenzie, CEO of The Guild of Property Professionals, said lockdown was only a short-term obstacle to UK house prices.

Vendor enquiries ‘improving each week’
“While transactions are being hit hard and will likely be impacted for the next few months, it will be temporary,” he said. “I predict the market will start to recover shortly after restrictions are lifted.

“New vendor enquiries are starting to recover week by week. [This points] to the fact that people want to move, but are currently unable to while the fight against coronavirus continues.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said Nationwide’s figures hold hope for UK house prices.

“If, as we are finding, that most transactions have been put on hold rather than cancelled, then most could be reinstated if restrictions are eased soon and economic damage is relatively limited,” he said.

By Joe Curtis

Source: City AM

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How badly will coronavirus hit UK house prices in 2020?

UK house prices could fall by as much as 10 per cent this year due to the impact of coronavirus, experts predict.

UK house prices had started to recover from uncertainty caused by Brexit at the end of 2019.

And the so-called Boris bounce from the Tories’ election victory in December set the market up for a strong start to 2020.

But then coronavirus came along, sending the UK into lockdown – meaning buyers couldn’t visit houses, a fairly crucial step when moving house.

The dramatic economic hit has also made people more wary of making big purchases right now.

While the impact of the coronavirus outbreak on UK house prices is not yet fully understood, analysts believe they will dip in the second and third quarters of 2020.

The latest Rightmove research published this week showed the average price of property coming to market this month dipped 0.2 per cent to £311,950. By contrast, in April last year UK house prices increased 2.1 per cent.

The property platform said there is not a “functioning [housing] market” due to the coronavirus lockdown and that new sales were “almost impossible”.

Meanwhile, figures published this week by the Land Registry and the Office for National Statistics showed inflation fell back to 1.1 per cent in February after climbing to an eight-month high of 1.5 per cent in January.

What will happen to house prices in 2020?

Analyst predictions on the impact of coronavirus on UK house prices vary due to the uncertainty surrounding the lockdown exit plan and the wider economic impact.

Zoopla: Impossible to predict scale of blow

“History tells us that house prices tend to fall when the economy shrinks as a result of falling output,” says Richard Donnell, research director at property platform Zoopla.

“[This] has a knock on impact for unemployment or higher borrowing costs – all things that can result in more ‘forced sellers’.”

“Thus the scale of the impact on house prices depends upon the scale of the economic impact from Covid-19.”

Savills: House price fall of up to 10 per cent

Estate agent Savills estimated that average UK house prices will fall between five per cent and 10 per cent in the short-term while the low transaction market caused by the coronavirus lockdown continues.

EY: House prices could fall five per cent

Howard Archer, chief economist at EY Item Club, forecast that UK house prices could drop between three per cent to five per cent in the second and third quarters of 2020.

Knight Frank: Prices to sink three per cent

Meanwhile, Knight Frank predicted that average UK house prices will dip three per cent this year, and property values in London will fall two per cent.

Chesterton’s: House price drop of two per cent

London estate agent Chesterton’s also estimated that house prices in the capital will fall two per cent in 2020 due to coronavirus.

When will UK house prices bounce back from coronavirus?

Despite the gloomy outlook for house prices this year, most analysts believe the housing market could make a strong recovery by 2021.

CBRE said that pent up demand in the period after the coronavirus crisis is likely to cause a “spike in activity” in the housing market.

Knight Frank: London house prices to jump six per cent in 2021

Knight Frank forecast that London house prices will jump six per cent in 2021, while Chestertons said it expected to see growth of three to four per cent in central London next year.

Savills: London house prices to lead recovery

Despite forecasting a steep decline in UK house prices this year, Savills was more optimistic about the years ahead. The estate agent’s analysts say mid-term price growth will be an average of 15 per cent over the next five years, with prime central London leading the recovery.

EY: House price recovery of two per cent in 2021

However, EY Item Club’s Archer was more cautious, saying UK house prices could grow by two per cent next year.

“Given the impact on the economy from coronavirus, the likely substantial rise in unemployment and the impact on many people’s incomes, the housing market looks unlikely to return to the levels seen at the start of 2020 for some time,” he said.

By Jessica Clark

Source: City AM

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UK house prices dip as coronavirus lockdown makes sales ‘almost impossible’

UK house prices dipped during the coronavirus lockdown as experts warned the housing market was barely functioning due to the restrictions.

The latest data from Rightmove showed that the average price of property coming to market dipped 0.2 per cent to £311,950. In April last year UK house prices increased 2.1 per cent.

However, Rightmove said recent statistics were not “meaningful” as there is not currently a “functioning market” due to the lockdown. New sales were “almost impossible”, the company said.

“You do not have a functioning market when buyers can’t buy and sellers can’t sell, and so the focus needs to be on what is required to help the market recover once the lockdown can safely be eased,” Rightmove said.

The research showed that existing sellers have largely remained on the market, with total available stock for sale down 2.6 per cent since lockdown was enforced on 23 March.

Miles Shipside, Rightmove director and housing market analyst, said: “Agents report that there is good co-operation, with both buyers and sellers keen to hold deals together.

“While some buyers may express concern over the possibility of short-term dips in house prices, many are taking the longer-term view and living up to their commitments to proceed.

“This is being helped by mortgage lenders extending the life of existing mortgage offers by three months, and new legal rules on flexible completion dates.”

Former RICS residential chairman Jeremy Leaf said the survey confirmed what firms are seeing “on the ground”:

“Our offices may be closed but the market is anything but quiet. Buyers and sellers are pausing, not cancelling sales, or listings, while continuing to access websites readying themselves for when lockdown restrictions are eased.

“But the market cannot re-start in isolation. We need surveyors to work with lenders, agents, and solicitors to ensure successful transitions as well as continuation of social distancing and safe visiting”.

There has been an abrupt turnaround from the best start to a year since 2016. Pre-lockdown sales agreed in the year to 23 March were up 11 per cent on the same period last year.

However, potential buyers and sellers are still planning for the future. Visits to Rightmove dropped 40 per cent when the lockdown was announced, however the platform’s sold prices section has recovered more quickly since the restrictions were implemented.

Property firm Knight Frank said that the market would require urgent government stimulus in order to get it functioning again.

According to new research from the firm, the lockdown will result in 526,000 fewer house sales in 2020, a reduction of 38 per cent on 2019.

It also expects lenders to approve 350,000 fewer mortgages as a result of coronavirus, including 150,000 to first time buyers.

In order to get the market moving quickly, Knight Frank said the government should introduce a holiday from Stamp Duty and extend the Help to Buy scheme to boost consumer confidence.

By Jessica Clark

Source: City AM

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Calls for stamp duty holiday as UK house prices set to fall amid coronavirus crisis

The government has been urged to take action to support the housing market, including a stamp duty holiday, as UK house prices are forecast to drop due to coronavirus.

The Royal Institution of Chartered Surveyors (Rics) has called for a stamp duty holiday as a “short term measure”. It said it could encourage potential buyers to act after the immediate public house crisis has passed.

The call came as a survey found 74 per cent of respondents expected London house prices to drop within three months. UK house prices are also expected to fall.

Last month 39 per cent of chartered surveyors reported a fall in buyer demand in the capital. 60 per cent more respondents reporting a fall in agreed sales than in February.

New homes coming onto the market dropped sharply in March, with a net balance of -63 per cent of London respondents reporting a fall.

Meanwhile, six per cent of landlords have reported a rise in new instructions during March. Tenant demand rose 19 per cent.

Respondents said the virus will drive rents down in London over the three months.

Hew Edgar, Rics head of government relations said: “As we start to emerge from this crisis… it is likely that the finances of potential homebuyers will be under strain, and the burden of stamp duty could put buyers off.

“For those who can afford to move they may lack confidence in the market, adding to the slow down.”

A stamp duty holiday could “reactivate the housing market quickly as a short term measure,” he said.

Simon Rubinsohn, Rics chief economist, added: “The feedback from the survey does imply that further government interventions both in the wider economy and more specifically in the housing market may be necessary to aid this process supporting businesses and people back into work.”

By Jessica Clark

Source: City AM

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What does the coronavirus crisis mean for UK house prices?

We’ve been in lockdown all week, and I’ve been writing about coronavirus nonstop. (In fact, it’s been such a busy week that I literally just stopped for a minute there to check that we’ve only been in lockdown for one week, and not two). And yet I realised that there’s something missing.

I haven’t said a word about the most important asset class in the UK. It’s time to rectify that oversight. Today we ask: “What does coronavirus mean for house prices?”

The UK housing market is closed for business

Let’s start with the obvious. No one is allowed to leave their houses except for essential purposes. Essential purposes – wild as that may sound to some – do not include house hunting. So that means the residential property market is pretty much closed.

Quick interjection here for those of you who are currently in the midst of moving and wondering what to do now – the government yesterday said that “there is no need to pull out of transactions”. And if you’re moving into a vacant property, you can basically go ahead as before.

But if you’re moving to a currently occupied property, “we encourage all parties to do all they can to amicably agree alternative dates to move, for a time when it is likely that stay-at-home measures against coronavirus… will no longer be in place.” In other words, chains across the country are going to be extended massively and potentially to breaking point. (We’ll have more on the mechanics of all this in next Friday’s issue of MoneyWeek – sign up now and you’ll get your first six issues free).

Property website Zoopla apparently reckons that the number of homes sold in the UK will fall by 60% in the next three months. I hate to say it, but that actually sounds optimistic to me – and buying agent Henry Pryor, no stranger to MoneyWeek readers, agrees.

Deals are also going to fall through left, right and centre. Would you move now, unless you absolutely had to? No chance.

There’s another reason the housing market is closed: banks are rapidly shutting down the range of mortgages they offer for new purchases. In effect, unless you can stump up a 40% deposit, you’re going to find it difficult to get a mortgage to buy a house, even if you really want to go ahead right now.

Why is this happening? Firstly, the banks say they are struggling with staffing, which is fair enough given that call centres the world over are shutting. More pertinent though, are two key factors.

One, you can’t tell what a house is worth right now because liquidity in the housing market (always tricky even at the best of times) is gone. It’s very hard to value a home when there are no comparable sales to gauge it against.

Two, you don’t know how secure your customer’s job is. The government has put in place some very strong temporary measures to protect people – but what happens in a year’s time? What state will the economy be in?

Do you want to be writing loans to individuals whose future income is uncertain, secured against assets of uncertain value? Nope, and banks don’t either.

Of course, in pulling the supply of credit to the housing market, they risk creating the very scenario they fear. But as my former colleague Phil Oakley noted to me the other day, that’s what banks always do in these situations.

What does all of this mean for house prices?

OK, so we have a near-total housing market freeze. What does that mean for prices and other financial side-effects?

From an investment point of view, the market appears to have just woken up today to the fact that none of this is good for housebuilders. Housebuilders make houses. If no one is buying their products, they need to hunker down and conserve cash. Maybe they’ll get a chance to build land banks on the cheap, but maybe not.

So you’d probably want to avoid that sector for now (we’ll see how cheap they get).

As far as the housing market goes: the obvious point is that you won’t be able to trust any price or transaction data for several months. There will be some forced sales (hopefully not too many, given that people should now be able to ask for three-month mortgage holidays where needed), and there will be some cash buyers.

However, for anyone who isn’t a professional property flipper or large-scale landlord, none of that is terribly relevant. In stockmarket terms, this isn’t a crash – it’s more like the market has actually been shut.

So what happens when it re-opens? That’s more important. House prices are pretty much driven by the price and availability of credit. If interest rates are low, and you can also get a mortgage easily, then house prices will be high.

If rates stay low but it’s hard to get a mortgage, then transactions probably dry up, but those that do go through will still be at relatively high levels (in effect, you’re only allowing people with access to credit to move).

If rates go up, that’s when you start to see prices falling. Alternatively (or simultaneously), if lots of people lose their jobs and thus become forced sellers, that’s also when you start to see prices falling.

So what’s likely to happen? I guess it depends. The estate agent optimists argue that there will be pent-up demand, but I don’t think we’ll get a V-shaped recovery. A lot of people who had wanted to move will either find that they can’t be bothered any more, or that they are too worried about job security to do so. So I can see it taking a while for transaction levels to recover.

But what about interest rates? I don’t see them going up. I think interest rates will be capped for quite some time and that inflation will be given as free a rein as possible to take off and start eating away at all the debt we’ll have incurred during this. That in turn could and should lead to higher demand for physical assets such as property.

However, again this depends on the economy bouncing back strongly and there being no lasting rise in unemployment. I think that’s still possible – and obviously in the longer run the economy will recover – but it’s the timescale that I’m not sure about.

Overall though, given the importance of house prices to UK households’ balance sheets, this isn’t good news for consumer confidence. But then, none of us is able to go out and spend widely right now anyway, so maybe that’s not as important as it normally is.

Long story short – you can’t move right now so worrying about house prices is probably a waste of time. In six months’ time, we’ll see where we are. In the longer run, I’d expect a combination of low rates and rising inflation to push prices up. But it might be a wee while before we get there.

By John Stepek

Source: Money Week

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Coronavirus to bring UK house prices growth to ‘juddering halt’

The coronavirus outbreak is set to bring UK house prices to a “juddering halt” in the coming months, a top economist warned today.

UK house prices fell 1.1 per cent between December and January. But they were 1.3 per cent up on the previous year, data released today showed.

The Office for National Statistics said UK house prices increased 1.3 per cent over the year to January. That was down from 1.7 per cent growth in December.

Average UK house prices increased 1.1 per cent over the year in England to £247,000. In Wales they rose two per cent to £162,000. And they were 1.6 per cent up in Scotland to £152,000, and 2.5 per cent higher in Northern Ireland to £140,000.

London house prices grew 1.4 per cent over the year.

Howard Archer, chief economic adviser to the EY Item Club, said the data showed the housing market was in a relatively good place following December’s election.

Coronavirus to harm UK house prices’ Brexit recovery

But he warned said coronavirus was likely to stop growth in its tracks.

“The late-2019, early-2020 upturn in the housing market looks certain to be brought to a juddering halt by the impact of coronavirus on the economy,” he said.

Miles Robinson, head of mortgages at online mortgage broker Trussle, added the coronavirus outbreak will deal a blow to UK house prices.

“We can’t ignore the elephant in the room,” he said. “Pressure is mounting on the economy as the coronavirus outbreak escalates. As it stands, we’re yet to see its full impact on the housing market.

“With more stringent government guidelines now in place… sellers may see a drop in property viewings for at least three weeks.

“Many existing homeowners will have been financially affected by the outbreak. The chancellor’s announcement to freeze mortgage repayments will help to reassure those who are worried about their ability to make their monthly payments.”

Archer said data from other sources such as the Bank of England and a survey from Halifax showed the UK housing market was in good shape before the crisis hit.

The Halifax survey showed a 2.9 per cent increase in UK house prices in the three months to February.

However, a recent survey from the Royal Institute of Chartered Surveyors (RICS) showed early evidence of the possible impact of coronavirus.

The RICS survey said: “Although near term sales expectations remain positive, optimism has moderated somewhat, with anecdotal evidence suggesting concerns over the economic impact of the coronavirus are weighing on the outlook to some extent.”

Rightmove has in the last week reported a “significant” slowing in property sales.

By James Booth

Source: City AM

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UK house prices surge post-election, but Covid-19 dampens outlook

House prices hit a fresh high in February, data published on Monday showed, as consumer confidence improved following last year’s decisive general election.

According to Rightmove, the UK average new seller asking price hit a record high of £312,625, a 1.0% month-on-month increase that pushed annual price growth up to 3.5%.

The number of sales agreed rose by 17.8%, the highest for the time of year since 2016. Overall, properties sold an average of 6% faster nationally and 15 days more quickly in London.

The UK housing market – and the capital in particular – has struggled in recent years. Ongoing political turmoil over Brexit and successive general elections dampened consumer confidence and saw prices dip as sales fell away.

The Conservative’s decisive general election victory and the UK’s subsequent departure from the European Union have helped ease that uncertainty, however.

In London, the price of property coming to market jumped 5.1% year-on-year, to an average of £638,826, the highest annual growth rate since May 2016. The number of sales agreed ratcheted ahead 34.4%, the highest level for four years.

However, the survey conceded that going forward, the outlook was now less certain.

“The market has been waiting for several years for a window of certainty, and 2020 seemed set to be the year when many would look to make a move and satisfy their pent-up housing needs,” said Miles Shipside, Rightmove director and housing market analyst.

“However, the current fast pace of the housing market could now be temporarily affected by the spread of the Covid-19 coronavirus. We expect that housing market statistics, like other economic indicators, could be prone to volatility over the spring and summer.”

Marc von Grundherr, director at London estate agent Benham and Reeves, said: “London is now back with a bang. An annual increase in asking prices of 5.1% is the highest level that we have seen in years, and is as a consequence of buyer demand coming back strongly in all price ranges.

“Covid-19 is of course a significant issue, albeit that enquiry levels and viewings do seem to be holding up for now, and we should remain optimistic for swift resolution to the pandemic followed by a robust response from markets including property.”

Rightmove measured 111,464 asking prices, which it said was around 95% of the UK market, for its latest monthly survey. The properties were put up for sale between 9 February and 7 March.

By Abigail Townsend

Source: ShareCast

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UK house prices shrug off Brexit, sail into coronavirus

UK house prices seem to have shrugged off the Brexit effect. The number of estate agents’ signs being posted outside UK homes seems to have proliferated since the election in December, and now there is an air of renewed confidence in the UK housing market that was not there before.

This is reflected in the latest data from Halifax, which shows UK house prices are up 2.8% for the month of February. This represents a month on month increase of 0.3%. The average UK home is now valued at GBP 240,677.

Growth in UK house prices has looked steady this year

Growth in the value of UK housing has been steady ever since the start of the year. Halifax said it was seeing a sustained level of buyer and seller activity that was not there in 2019. The UK has now officially left the EU, and there has been something of a sigh of relief in the UK property market, but there are also further storm clouds on the horizon.

Halifax says it is hard to gauge the impact of the coronavirus but as this could significantly damage UK economic activity this spring, there could also be a knock on effect on UK house prices.

The house view here at The Armchair Trader is that the spread of coronavirus will slow down as the weather warms up, as it follows the dynamics of traditional flu. The damage to the UK economy is going to be harder to quantify but is likely to feed through into UK house prices.

Mortgage approvals data supports house prices gain

Mortgage approvals data is supporting the price growth numbers published by Halifax. Lender Octane Capital has conducted its own risk review of the UK property market following the general election result and is lowering the rate on its larger lender, developer exit and refurbishment loans by up to 2% per annum.

“Like other lenders we regularly review the macroeconomic outlook and felt especially compelled to do so in the New Year following the decisive general election result,” explained Mark Posniak, Managing Director with Octane Capital. “Our in-house view is that a new environment of greater political certainty will see a lot of pent up demand for property come through, with subsequent upward pressure on prices.”

Posniak said he believed the Bank of England will counter any continued economic weakness with more monetary easing which could provide an additional boost to UK property prices going into Q2.

Buyer sentiment is going to be crucial here. We have seen a couple of months of activity since the end of the Christmas holiday period which has supported the thesis that the UK house buyer is coming back into the market. The coronavirus is not going to help UK house prices in the short term and we are not expecting March numbers to look as good as February’s.

That said, for buyers that are still contemplating an entry into UK housing as an investment before a possible post-Brexit boom the numbers do illustrate that the appetite is there. The coronavirus will, if anything, provide investors with a few more months to pick up some bargains before the market picks up in the summer.

Source: The Armchair Trader